Credit crunch putting the bite on cafe culture

Thu Nov 13, 2008 3:59pm EST
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By Phakamisa Ndzamela

LONDON (Reuters Life!) - What the global financial crisis means to the international coffee trade is as simple as deciding whether to drink it in a cafe or your own kitchen.

Industry experts said on Thursday that a growing cafe culture -- which has seen affluent consumers spending top-dollar for the beverage in premium restaurants -- has come under pressure as consumers look to tighten their household budgets.

Coffee is the second biggest traded commodity in value after oil and over 25 million people are employed in the growing, distribution and retailing of coffee worldwide.

"What we've observed are some declines in people drinking in expensive restaurants," said Jonathan Banks, business insight director at The Nielsen Company, a New York-based market research company.

Banks said that due to the financial turmoil some people preferred slightly cheaper coffee shops, while others are just staying home for a nice cup instead of going out.

Starbucks Corp, the world's largest coffee chain, cut its plans for new international coffee shops and effectively lowered its 2009 forecast after posting a steeper-than-expected decline in fourth-quarter profit on Monday.

"We believe that customers continue to visit our stores, but are doing so less frequently," said Deb Trevino, global director of communications at Starbucks.

But that doesn't mean that consumers who want to cut back on the cost are also keen to scrimp on their coffee experience.   Continued...

<p>A coffee taster sips coffee during a contest in Lima October 2, 2008. REUTERS/Pilar Olivares</p>